outsourcing fund management

Outsourcing fund management vs. in-house solution

 

Participation in alternative investment feeder funds or fund of funds can be mutually advantageous strategy for wealth managers and their clients. Wealth managers provide access to institutional alternative assets, and clients get uncorrelated strategies and returns. However, of all the roles a wealth manager fulfills – client services, portfolio management, financial and estate planning, business development – fund management and administration can be the most crucial. At the same time, it can also be the most tedious and time-consuming. A growing number of wealth managers are finding that outsourcing fund management and administration relieves them of low-to-mid level tasks and risk, and frees up valuable time while ensuring expert attention to detail.

To some, the idea of outsourcing connotes both positives and negatives. Some question knowledge, expertise, accessibility, and location of the service provider. A quality fund operator offers a record of success, along with transparency and accessibility to key personnel at the asset manager and the underlying investments. An effective fund operator will also enable wealth managers to accomplish their goals and grow their business while delegating administrative tasks.

Eye on Your Core Business

Managing a fund in-house can distract from a wealth managers’ core business functions. The paperwork, reporting, and accounting involve a myriad of details.

With feeder funds, the number of individual investors only serves to amplify the level of detail, including recruiting, hiring, and managing extra staff or diverting specialty internal resources.  It all adds up to a lot more work and a lot less time to do the things that enable a wealth management firm to prosper. Why tread water trying to keep up with administration? Having a reliable outsourced service provider will free up time and stress.

The Checklist

An outsourced fiduciary can manage all infrastructure associated with creating, managing, and closing an alternative investment fund.

  • Fund structure– Terms, fees, structure, size, and valuations require expert attention. Due diligence by the wealth manager can be very time consuming and, if not done properly, can lead to faulty decision-making.
  • Fund Formation– Legal documentation, regulatory filing, and setting up bank accounts are generally not within a wealth manager’s expertise or the preferred way to expend valuable time. It is essential to have a reliable, skilled team to handle all upfront compliance.
  • Fund Launch– From gathering assets and deploying capital to completing ongoing reporting and communications, there are a number of logistical, regulatory and operational challenges. Putting in place an outsourced system eliminates tedious back-office operations in-house.
  • Fund Closing– Client information validation, incoming wire reconciliation, and updating documents are the last step to a fund’s creation. Successful closings are about process as much as the ultimate payout. You have an opportunity here–and at every turn–to solidify your You also set the stage for presenting subsequent alternative asset investment opportunities.

Use Our Advantages to Your Advantage

Today, a wealth manager doesn’t have to shy away from investing clients in alternative funds because of the infrastructure logistics surrounding feeder funds or fund of funds. PPB Capital Partners was specifically created to be a fiduciary partner – handling all the tasks from start to close. We don’t just do the work, we also provide expert guidance for every step.

Why feel shut out from alternatives when you can step in? Schedule a call and let’s talk about how we can be your bridge to offering alternative investments for your high net worth clients.

 

We also invite you to download our guide: Starting Your Fund Checklist to see how we can help you get started.